Latest in Stimulus: 'Cash for Refrigerators' Could this help the plumbing industry?

Will plumbers profit by this by people needing water lines, connected for it? or new plumbing needed needed the dishwashers or washing machines? Could this become a way you could advertise somehow to pick up business?

By Matthew Boyle Matthew Boyle â€“ Mon Aug 24, 8:08 am ET
A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history.

Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)

"These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

The money can't come soon enough for the home appliance industry, which is mired in an unprecedented sales slump that began when the housing market cooled in 2006. Since then that slump has worsened considerably. Shipments of washers, dryers, refrigerators, and ovens dropped 10% in 2008 and are down 15% through July, according to the Association of Home Appliance Manufacturers. "It's brutal," says Raymond James (NYSE:RJF - News) analyst Sam Darkatsh.

a marketing push around rebates

The leading appliance makers have felt the pinch. Whirlpool of Benton Harbor, Mich., which controls about 40% of the U.S. market, has seen its sales drop 20% through the first two quarters of this year. North American shipments for its Stockholm-based rival Electrolux, meanwhile, have dropped for a dozen consecutive quarters. Both companies have laid off hundreds of workers, and General Electric (NYSE:GE - News) mulled shutting down an entire refrigerator plant earlier this year until deciding to keep it open with a reduced workforce.

Not surprisingly, appliance makers cheered the news. Electrolux spokesman Tony Evans calls the federal program a "great opportunity to encourage consumers to replace their old appliances." Lately, cash-strapped consumers have chosen to repair, rather than replace, hobbled dishwashers and other water-intensive appliances, according to industry analysts. Electrolux says it is readying "aggressive" marketing programs that will run parallel with the rebates, and it's reasonable to expect appliance makers and retailers will devise additional discounts to amplify the rebates' appeal. "We will be ready to go when the new incentive programs hit the market," Evans said.

Unlike the popular, $3 billion cash-for-clunkers vehicle program, which ends on Aug. 24, there's no guarantee that hard-hit consumers are prepared to plump for new washers, stoves, and fridges. The federal outlay will piggyback on rebate programs for energy-saving appliances that have existed for years in more than 25 states, but which have largely failed to spur demand. Home improvement retailers like Home Depot (NYSE:HD - News) and Lowe's (NYSE:LOW - News) have also offered deep discounts on big-ticket appliances lately, with little impact.

"The cash-for-clunkers (program) had a discernible value proposition for the consumer, because he knows how much his (clunker) is worth," says Darkatsh, the Raymond James analyst. "With appliances, there is no trade-in. You can walk into Home Depot and get a great deal on a home appliance any time you want one. Why would it drum up sales now?" Laura Champine, an analyst with Cowen & Co. (NasdaqGS:COWN - News), agrees. "I'm not sure if it will be as powerful as cash for clunkers because there is something compelling about that $4,500 discount," she says. "Also, a new car is more fun than a new dishwasher. So I'm not sure if it will be as much of a driver, but any driver is welcome right now."

Stock Market Overreaction

Analysts also believe that the stock market's reaction to the program is overblown. Whirlpool's shares rose 6% on Aug. 20 when news of the program circulated, and climbed another 5% the following session. "That's silly," says Darkatsh. He estimates that in a best-case scenario the rebates will equate to about $240 million in incremental sales for Whirlpool. But that's unlikely, as it assumes that every American buying under the voucher program would not have done so otherwise. "The vast majority would have bought them anyway," as purchases of appliances such as fridges and washing machines are far less discretionary than, say, cars or big-screen televisions, Darkatsh says.

The recession's ability to blunt the program's impact was underscored by a call to the California Energy Commission to discuss its approach to the rebate program. The entire state office is on unpaid furlough each Friday in August; no one picked up the telephone.

Might be, but when I had a new dishwasher installed, we found their wasn't a shut off. So, had to get a plumber in here, put a shut off in. Then, when I had a new stove put in, guess what? The shut off again, this time because it wasn't behind the stove as is should had been?? It was in the garage one floor down on the opposite side of the house. My fridge is older but still working, but I had a plumber put in the ice maker. So, I don't know, it might work for some plumbers, if you advertise, kind of riding their coat tails why not?

Just some thoughts, maybe not good ones, but maybe, ones you guys could expand on somehow that I don't know about.

oh, then, the washer, I had to change the shut offs, lol, they were leaking. All my shuts offs,

I don't think you quite understood this, now, when I had my stove replaced, I bought it at HD. They delivered it, and when they pulled out my old one, would not install it, because of the shut off. So, it was pushed aside, until, I got a plumber out. Now, the plumber came, he installed a shut off, and I paid him only to do the shut off. Then, called, HD back, and within a few days they came and finished installing it. No problem.

Then, same thing pretty much with the dishwasher. They came by with the dishwasher, and pulled out the old one, and then, told me, I didn't have a shut off. It was the same men, lol. They were actually nice. So, same thing. I called the plumber back. He put one in and then, I called HD back, they came back.

Now, let's go downstairs. I got a new washer and dryer. The dryer was about 20 years old, same with the washer and the dryer wouldn't get hot. One day, it just stopped getting hot. So, I figured, alright, might as well save on delivery fees here, and get the washer, too.

Well, they put in the washer and dryer, but then, we found when they turned off the shut off it was leaking. Sorry, Steve, but I had never shut if off before. So, on the advice of the men from HD, I called back the plumber and he put in 2 new shuts offs.

Just an idea, maybe not a good one, but I thought, maybe something you guys could think about, if more people are going to be buying new appliances because they are so old, they might need newer shuts offs, or shut offs, or gas lines, or newer plumbing.

Yep, which leaves an opening for plumbers to fill the void when people take advantage of the rebates. My house was built before they used shut offs, I reckon. So, I needed shut offs. I wouldn't think that would be a bad turn for an hour's work maybe to make some money over it. I got a feeling alot of the older homes, may just be like mine. So, there you go, if I am right, their might be a need which the plumbers could fill. Just an educated guess and a hunch on my part. I could be wrong, but, if I am right could be a nice little turn of events in something I think is simple to do?

My shut off on the washer started leaking the moment we turned it back on. I called the plumber because they don't do shut offs, they install the appliance, that is it. So, plumbers can take advantage of that without having to install the appliance. Just do the plumbing.

I didn't mean you , LOL., and maybe, I should had said, " if you don't agree, be friendly?" even then, it would not be directed at you, or anyone in particular just a blanket statement because some people really do get touchy about things.

I am not sure I am understanding what you mean about Steve and the dishwasher, because the way it worked for me, was, HD came, brought the dishwasher. Took my old one out. Then, saw I didn't have a shut off. So, they shoved it in the opening but left it go. I called a plumber, he came and put the shut off in under the sink for me. Then, I called HD back, and they finished installing the dishwasher.

HD would not do the shut off, but, I had already paid them to install the dishwasher when I bought it. I would had to pay the plumber extra for him to connect the dishwasher up to install it. So, all I had him do was the shut off.

I think, Steve, thought I meant doing everything. Am I right? That is not what I talking about here.

I just thought it would be a way for plumbers to gain alittle bit of business. People might take advantage of the rebates, their appliances are old. They might need new plumbing or even just like me, shut offs. If their appliances are old enough to replace, everything might be in need. Then, they might need a plumber down the road for other things, might be a nice way to pick up business. That is all I am saying, I see something in it for the plumbers.

I was outside this morning and while talking to my neighbor he started telling me about the rebate program for appliances! We started talking and I referred the plumber I use here (he asked me if I knew a good plumber) so I referred him the one we use at the office for RE, and the one who unclogged my drain. When I asked him what he needed, he said, shut-offs. He is getting a dishwasher, and a washer & dryer, and a new stove, an electric and will need an electric line runned.

Around here, the HD still does hookups. The drivers used to carry a flare adapter from 1/2" flare to the 15/16 flare nut size, but flare adapters are not cool, so today I believe they make you get the gas valve replaced.

I will be lining up if they have rebates! I was already to sell barrack my '94 toyota truck for $4500, but the gas mileage is too good so it wasn't eligible. If they are willing to pony up $200 for my refrigerator which turns 20 this month, I will be happy to take that money!

This will generate some buisness...I have customers that will call if they buy a new one because they have had the big box stores do them in the past and there is always something they charge for that is not part of a replacement and they do want it done right...I don't cut corners like they might...I have seen floors ruined because the DW was hard piped and they didn't switch it over to a flex line like I would have and the connection leaked...

This will generate some buisness...I have customers that will call if they buy a new one because they have had the big box stores do them in the past and there is always something they charge for that is not part of a replacement and they do want it done right...I don't cut corners like they might...I have seen floors ruined because the DW was hard piped and they didn't switch it over to a flex line like I would have and the connection leaked...

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DAMN! Talk about coincidence. Check this out: I had no clue this topic was moving this direction but yesterday what you just described, happened and the only reason I'm going public with the situation is because of that attitude from the woman on the other end of the phone when she was asked "why didn't you send out a licensed electrician?" << Homeowner

"Ma'am, you have to specify you want a licensed electrician." << Handyman Connection

"But I thought that was a given when you call for an electrician and they do electrical work."

At that point I'm seeing red and my camera is telling me to pick it up and let reality show what was happening. Please read the story line to the events involving someone who had no clue how to deal with a dishwasher with a hard water line leading to it. They was called out to do electrical work to this unit, and the damage occurred when they tried to move it, access this electrical situation. MOST, if not ALL reputable companies would instantly step up to the plate and resolve this issue immediately, but apparently they are exploiting a customer that doesn't like confrontation (like most) and are pacifying the situation by saying this is normal, alright.

If this has happened in this way, I promise it has happened 1000's of times in regards to the dialect coming from the mouth of that representative of Handyman Connection.

I had to call the customer this morning after they called me last night, told me that the dishwasher was fixed when they came back out and simply plugged that wire connection back into the solenoid valve. Nevermind the fact that it's been ripped out from underneath it, leaking, doing damage to the floor and the smoke that was coming from inside the unit yesterday from no water inside the unit?

Apparently that's not the focus at this point for the last ones who destroyed this unit. It might be working but it's leaking and there's a homeowner that will soon have to use their insurance, possibly pay out of pocket expenses for a floor and dishwasher if it is not done correctly.

When I get involved with a catastrophe like this, there's a 100% guarantee that the negligent actions, the people who caused the problem always make it right.

The attitude of the secretary was a script to lie, lie, deny any wrongdoing. Next time they might want to understand there's a contractor in the room that won't let it get swept under the rug like they're trying to do.